An expanding customer base couples well with strategic acquisitions to position Gen Digital for continued earnings growth in a high-potential sector. The company’s focus on AI-driven security solutions and identity protection services aligns well with emerging cybersecurity trends, including the rise of AI-powered threats and identity theft.
The acquisition of MoneyLion not only diversifies the firm’s offerings but also provides significant cross-selling opportunities and access to new customer segments. This move strengthens the company’s position in the financial wellness space too, and complements its existing cybersecurity solutions.
With an attractive valuation at just 11.3 times forecast earnings, this top pick offers investors exposure to the high-growth cybersecurity market while providing decent income too.
GEN DIGITAL INC. (Nasdaq symbol GEN) changed its name from NortonLifeLock (old symbol NLOK) following its September 2022 acquisition of European cybersecurity firm Avast plc for $8.1 billion.
Gen is the parent company for several security-related brands, including Norton, LifeLock, and Avast, in addition to Avira, AVG, and CCleaner; those last three were obtained in previous acquisitions.
Gen continues to attract new customers. As a result, overall revenue in the quarter ended December 27, 2024, rose 4.0%, to $986 million from $948 million a year earlier. Excluding one-time items, earnings rose 11.1%, to $350 million from $315 million. Per-share earnings climbed 14.3%, to $0.56 from $0.49, on fewer shares outstanding.
Meanwhile, Gen continues to spend a high 9% of its revenue on research. That’s letting it develop new products to spur its long-term growth.
For example, it has launched a new AI-powered mobile application and web-based service (called Norton Genie) that aims to provide a way to check if texts, emails, websites and social media posts are a scam.
Genie draws from Norton databases and experience to uncover and deal with scams, phishing attacks and unsafe websites. It’s also continually updated to detect new scams and guard against emerging threats.
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Gen Digital: New acquisition adds over 18 million customers
Gen has now agreed to buy MoneyLion Inc. (symbol ML on New York). That firm is a leading digital platform for consumers looking to make their best financial decisions.
MoneyLion’s full-featured personal finance offerings include credit building and financial management services. Additionally, Gen will acquire a proven B2B2C white-labelled AI platform that can be used and enhanced by Gen’s consumer base. A white-label product is a product or service produced by one company (the producer) that other companies (the marketers) rebrand to make it appear as if they had made it.
MoneyLion’s over 18 million customers will broaden and diversify Gen’s customer base and let it cross sell to its existing customers.
Gen’s existing financial service offerings help financial institutions reduce fraud expenses by integrating cyber safety solutions that enhance customer data protection online.
Gen will pay $82.00 per share in cash payable at closing, representing a total cash value of approximately $1 billion. In addition, for each share owned, MoneyLion shareholders will receive at closing one contingent value right (CVR) that entitles them to a contingent payment of $23.00 in Gen shares if Gen’s average volume-weighted share price reaches at least $37.50 over 30 consecutive trading days (from December 10, 2024, until 24 months after close).
There can be no assurance that any payments will be made with respect to CVRs. It is expected that the CVRs will be listed on the Nasdaq Stock Market.
Meanwhile, in the fiscal year ending March 31, 2026, Gen will probably earn $2.21 a share, and the stock trades at an attractive 11.3 times that forecast. The shares yield 1.8%.
Recommendation in Wall Street Stock Forecaster: Gen Digital is a buy.
